Tens of millions of pounds in lottery cash grants has gone to projects that have had to close or have fallen into financial difficulties, a report warns.

The National Centre for Popular Music, built in Sheffield at a cost of over £11m, went bust with the money wasted.

The £7m Dovecot Arts Centre in Stockton-on-Tees also closed, although it has since reopened.

The Commons public accounts committee looked at the progress of 15 projects funded by Arts Council England.

Over budget

The Arts Council is responsible for handing out National Lottery funds.

The committee looked into its first lottery programme which saw a total of £1.15bn distributed in 2,238 grants.

Of the 15 projects examined, nine were completed late, six went over budget by 20% or more, and the total cost overrun was £94m.

A total of £78m is still tied up in five projects experiencing financial problems.

On top of the £19m lost on Sheffield and Stockton-on-Tees projects, concerns have now been raised over the Arts Council's track record on project viability.

Lottery players will be rightly unimpressed that £19m has been spent...on two projects that have closed, denying that money to other good causes

Edward Leigh, public accounts committee chairman

The committee also said the council should spread more lottery money beyond the well-established arts organisations in London, and encourage a wider range of audiences.

Committee chairman Edward Leigh said: "Lottery players will be rightly unimpressed that £19m has been spent by Arts Council England on two projects that have closed, denying that money to other good causes.

"Arts Council England must make sure the changes it has made to its approach pay off in delivering viable projects based on a proper strategy and realistic
projections of visitor numbers.

"I also want to see Arts Council getting more Lottery funding to small bodies and communities outside London."

Welcoming the report, Culture Minister Estelle Morris said the government would respond in detail by Easter.

"The Arts Council has new systems in place which will ensure that projects are delivered better, and I know that other lottery distributors will have learnt from the council's experience," she said.

"Finally, let's not forget that the National Lottery has transformed the cultural landscape of Britain since its inception nearly 10 years ago.

"The overwhelming majority of projects funded have flourished and made a real difference to the quality of life for everyone in the country."

And Peter Hewitt, chief executive of Arts Council England, said: "Most of these projects date back to 1996. We have acted on all the PAC recommendations made since then.

"Almost all of the 15 projects considered, including the Sadler's Wells Theatre, the Royal Court Theatre, the Royal Opera House, Milton Keynes Theatre and Gallery and Manchester Royal Exchange, are a fantastic success with the public."